Taxes in Italy for American Retirees
Taxes in Italy
When Italy starts taxing you, how it treats a U.S. pension, and what the United States still expects from you regardless.
When you become tax resident
You are Italian tax resident if for more than 183 days in a year you are registered in the anagrafe population register, or have your domicile or habitual abode in Italy. Registering at the comune, which you must do, is itself one of the triggers.
How your foreign pension is treated
Ordinarily foreign pensions are taxable in Italy at progressive IRPEF rates plus regional and municipal surcharges, which are high. However, Italy offers a substitute regime that changes the picture completely for many retirees: a 7 percent flat tax on all foreign-source income for individuals who transfer their tax residence to a municipality of fewer than 20,000 inhabitants in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia or Sicily, available for nine tax years, provided you have not been Italian tax resident in the previous five years and you receive a foreign pension.
Special regimes
There is also a separate regime for high-net-worth new residents under which a fixed annual substitute tax covers all foreign income regardless of amount. The annual figure was increased for new entrants in 2024. Both regimes require an election and both have conditions; take Italian tax advice before relying on either.
The U.S. tax treaty position
The U.S.-Italy income tax treaty is in force and addresses pensions and Social Security. Interaction between the 7 percent regime and the treaty needs professional handling.
Wealth tax
No general wealth tax, but Italian residents pay IVIE on foreign real estate and IVAFE on foreign financial assets, both at low rates. These catch Americans who keep a U.S. house or U.S. brokerage accounts and are frequently overlooked.
Other taxes and reporting
The RW section of the Italian return requires disclosure of all foreign assets. Penalties for omission are meaningful. Inheritance tax rates in Italy are among the lowest in Europe with generous allowances between close family.
Remember the U.S. side
The United States taxes its citizens on worldwide income wherever they live. Moving does not end your filing obligation, and FBAR reporting is triggered by an aggregate of 10,000 dollars across foreign accounts at any moment in the year.
Agenzia delle Entrate · IRS: U.S.-Italy tax treaty documents
Taxes in Italy: common questions
When do I become tax resident in Italy?
You are Italian tax resident if for more than 183 days in a year you are registered in the anagrafe population register, or have your domicile or habitual abode in Italy. Registering at the comune, which you must do, is itself one of the triggers.
Will Italy tax my U.S. pension?
Ordinarily foreign pensions are taxable in Italy at progressive IRPEF rates plus regional and municipal surcharges, which are high. However, Italy offers a substitute regime that changes the picture completely for many retirees: a 7 percent flat tax on all foreign-source income for individuals who transfer their tax residence to a municipality of fewer than 20,000 inhabitants in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia or Sicily, available for nine tax years, provided you have not been Italian tax resident in the previous five years and you receive a foreign pension.
Do I still file a U.S. return?
Yes. The United States taxes its citizens on worldwide income wherever they live, and moving does not end the obligation. You get an automatic extension to June 15, the Foreign Tax Credit usually prevents genuine double taxation, and FBAR is a separate filing triggered by an aggregate of 10,000 dollars across foreign accounts at any point in the year.
Verified Sep 7, 2026 Primary sources: vistoperitalia.esteri.it, www.agenziaentrate.gov.it, www.salute.gov.it
This resource is provided free by Federal Apostille as an educational tool. It is not legal, tax, immigration or financial advice, and no attorney-client relationship is created by using it. Immigration rules, income thresholds, fees and processing times change frequently and often without notice, and consulates apply them differently. Always confirm current requirements with the official government source and the specific consulate that has jurisdiction over your U.S. state of residence before you act. Every figure on this site carries the date we last verified it and a link to the primary source.
